I came across an interesting article today on Gizmodo (part of the Gawker network — one of my daily reads, with Gawker, Deadspin, etc.) that reports that the Altria Group, a cigarette conglomerate that owns the Marlboro brand, is laying off workers to the tune of $300 million in savings.
Where are they going to put that newly available cash flow? Vaping.
Obviously, this is a huge signal to the industry. When one of the most iconic brands in the cigarette industry – seriously, when you think of cigarettes, what name cames to mind? – does something like this, it truly tells of a shift in the market for nicotine products.
Quoted from the article, which originally ran in the Wall Street Journal:
When asked during the call what the company planned to do with the $300 million in savings, [Chief Executive Marty] Barrington declined to offer specifics but did say the company continues to invest in “reduced harm products” such as electronic cigarettes and in its brands.
This is huge. Cigarette companies have been struggling over the recent years with declining sales, and have been trying different ways to increase their profits despite this trend. At first it was done through expansion into developing countries, but now that it seems that those efforts have been tapped, there has been a greater focus on new channels. Since electronic cigarettes, such as these ones, are a large reason for the declining sales, many traditional cigarette manufacturers have been snatching up e cig brands or starting brands of their own.
I thought this was a really eye opening bit of news, and I wonder if we will see other big makers of cigarettes make similar moves.
What are your thoughts? Do you vape on an ecig that is made by a cigarette manufacturer like Altria? Or do you use a smaller market brand? Do you have more trust in a company like Altria when it comes to these kinds of products?